FLASH GAGE – Price of Gold Responds to Richmond Fed Pres Remarks

Flash Gage - News Headlines that Impact precious metals as they happen.

Here they go again!

Richmond Federal Reserve President Jeffery Lacker (who by the way is NOT a voting member), said this morning that there is a strong case for raising interest rates, indicating that borrowing costs might need to rise SIGNIFICANTLY to keep inflation under control.

Lacker, trying to get some support from other members said, “preemptive increases in the federal funds are likely to play a critical role in maintaining the stability of inflation.”

I kind of remember just a few weeks ago Chairwomen Janet Yellen said we are still on data watch, meaning the Fed will raise rates when the data supports such increase. Did anything change overnight? NO!

So what happens? As soon as his comments hit the news wires the price of gold dropped $20 dollars to a low of $1291.70 in the December contract. Now gold has broken through its support levels, so I expect it will be an uphill climb to get us over the $1,300 dollar mark again and I’m afraid his comments will put a strong sell bias in the market for now.

I’ve said this in the past and it bears repeating. The Fed Presidents should NOT be allowed to give their opinions between Fed meetings, especially the ones who are NOT voting members. These comments mean nothing and cause unnecessary disruptions to the markets. The Chairwoman should impose a gag order and let the minutes of every FED meeting speak for themselves.

It’s time to end this madness.

Have a wonderful Tuesday.

Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals. This document is for information and thought-provoking purposes only and does not purport to predict or forecast actual results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein are current opinions as of the date appearing in this editorial only and are subject to change without notice and cannot be attributable to Dillon Gage. Reasonable people may disagree about the opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate its ability to invest for a long term especially during periods of a market downturn. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. This information is provided with the understanding that with respect to the opinions provided herein, that you will make your own independent decision with respect to any course of action in connection herewith and as to whether such course of action is appropriate or proper based on your own judgment, and that you are capable of understanding and assessing the merits of a course of action. You may not rely on the statements contained herein. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisors with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.